“It’s the economy, stupid” was a slogan that originated during former USA President Bill Clinton’s highly successful 1992 presidential campaign. It referred to the idea that one of the most important issues at the time in the USA was the state of the economy, and that voters would primarily concern themselves with economic issues when making decisions at the polls.
Hence, and according to the campaign, it was obvious and logical that this aspect had to be the focus of the campaign with a view to addressing and alleviating the associated concerns and issues of the voters. The voting public it appears was galvanised by the slogan’s key positive messages and the rest was history.
Untapped potential
South Africa’s energy sector has long been plagued with numerous structural and operational challenges, making it a prime example of the complexities facing countries striving to meet growing energy demands in a reliable, resilient and sustainable manner.
In this context, the phrase “the grid’s a diamond…. stupid!” serves as a reminder of the untapped potential of the electricity energy grid and the need for critical thinking, commitment, strategic planning and investment to unlock it.
Just as valuable
Like a diamond, a well-designed and efficient electricity grid system can provide stability, reliability, and sustainability to the energy supply, benefiting both consumers and the overall economy. Overall, the combination of rarity, durability, symbolism, brilliance, and investment value make diamonds highly valued and sought after especially in the jewellery market let alone its known value in the industrial, manufacturing and construction spheres as a value adding tool.
Similarly, it can be argued that the electricity grid is considered just as valuable as a diamond because of the essential role of electricity in modern society, its economic impact, its importance for public health and safety, its contribution to environmental sustainability, and its significance for national security.
Overlook
The term “stupid” is used in a metaphorical, respectful, rhetorical manner to emphasise and illustrate the importance of recognising and prioritising the grid infrastructure as an obvious “staring one in the face” key solution to addressing challenges within the energy sector. However, as the phrase suggests, there is a sense of foolishness or short-sightedness at times in overlooking the grid’s importance and potential.
In this respect it can be argued that SA’s current severe energy related problems can be inter alia traced back the early 2000’s when the government did not heed Eskom’s warnings that power generation capacity was “running out” and needed to be attended to. Lest we forget, an electric grid in remarkably simple terms is a network of synchronised power providers and consumers (or customers) that are connected by transmission, distribution and reticulation power lines and operated by one or more power system control centres, either nationally and/or regionally.
Backbone
In general terms the effectiveness and efficiency of electricity (a secondary energy carrier) as an energy source lies in its versatility, quick response time, cleanliness (when derived from renewable sources), controllability, transportation capabilities (viz., long distances), and ability to be converted into different forms of energy (viz., heating, cooling, chemical, mechanical, electrical, etc.).
The electricity grid, also often referred to as the backbone of the energy system, is indeed a diamond in the rough – an asset that requires careful management and investment to realise its full potential.
Mix of challenges
In South Africa, the energy landscape is characterised by a mix of challenges, including an aging and inadequate infrastructure, frequent blackouts, high electricity prices, and a heavy reliance on coal-fired power plants. These issues have been exacerbated by inter alia, mismanagement, corruption, state capture, and a lack of long-term planning.
As a result, the country’s energy sector is in a state of crisis, with power outages becoming a regular occurrence and hindering economic growth and development (albeit Eskom Generation has made a commendable recovery recently notwithstanding it’s still “not out of the woods as yet”).
Abundant
Despite these challenges, there are opportunities for South Africa to transform its energy landscape and harness the potential of the grid. The country has abundant access to low carbon energy resources, including wind, solar, gas, nuclear and hydropower, which can be leveraged to diversify the energy mix and reduce dependence on fossil fuels (post the current electricity crisis) in a prudent fit-for-purpose and just manner.
In this energy mix, the author supports the increased use of renewable energy but supported by other always-on dispatchable technologies. However, the transition to a more sustainable energy system is not without its challenges. The grid infrastructure must be upgraded and modernised to accommodate the integration of renewable energy sources, which can be intermittent and variable. In addition, regulatory frameworks and policies need to be revised to incentivise investment in clean energy technologies and promote energy efficiency.
Market value
The value of an electricity grid and a precious diamond can be compared from an accounting, economic, and market values perspectives, highlighting the different factors that contribute to their respective values. The electricity grid has significant economic and utilitarian value, while the precious diamond’s value is more driven by emotional appeal and perception in the market. From a market value perspective that includes perception, psychology, and emotion, a diamond and an electricity grid can be compared in terms of how they are perceived, valued, and traded in the marketplace.
The “diamond nature” characteristics and attributes of the electricity grid must be enhanced, marketed as such and accordingly reflected in how the grid gets priced and sold now as it evolves to a smart grid that incorporates smart technologies and serves as a “backup 24/7/365” for renewables when the sun does not shine, and the wind does not blow. The value of the grid in these circumstances must therefore reflect as a collective an accounting value model, an economic value model and a market perception values model or characteristics.
Specifically, the pricing model for the various grid related products and services must and should migrate from the current “kWh (energy)” commodity type electricity utility business model with an opaque non transparent “lumped-up” tariff model and be replaced with a grid services business model. The author calls or terms this migration the “diamond grid survival and recovery economic model” for Eskom and the municipalities.
Intrinsic value
Much like a diamond, the grid possesses inherent value properties and characteristics and brilliance that, when properly harnessed, can unlock a myriad of benefits for energy systems on a global scale. From enhancing energy security, reliability and resilience to enabling the integration of low carbon sources (includes renewable energy), the grid infrastructure is the cornerstone of a sustainable energy future.
The intrinsic value of a modern smart electricity grid lies in its ability to optimise energy efficiency, enhance grid reliability and resilience, integrate low carbon sources, reduce carbon emissions, and enable advanced monitoring and control capabilities. By leveraging advanced technologies such as Artificial Intelligence (“AI”), digitalisation, machine language, sensors, meters, automation, and data analytics, a smart grid can improve overall energy management, reduce energy waste, lower costs for consumers, and enable more sustainable energy practices.
AI irony
AI related technologies (includes Generative AI) and “bitcoin mining” are going to be “guzzlers of mega-electrons many folds from the grid” going forward and the “diamond-nature” of the grid is going to be a huge support in assisting AI to ironically enable the grid planners and decision makers to capacitate the grid to facilitate high AI power or electricity usage (viz., bigger datacentres, etc) in an accelerated manner.
Additionally, a smart grid can facilitate the adoption of electric vehicles, energy storage systems, and other distributed energy resources, creating a more flexible and dynamic energy ecosystem. Ultimately, the intrinsic value of a modern smart electricity grid lies in its ability to transform the traditional grid infrastructure into a more efficient, reliable, and sustainable energy system for the future.
Powerful message
In the landscape of South Africa’s still vulnerable electricity sector, challenges abound, from load shedding, load reduction, power outages and supply shortages to an aging infrastructure struggling to keep pace with the country’s growing energy demands. As we navigate these complexities, it is crucial to recognise the hidden gem at the heart of our energy system – the electricity grid.
In the words of the phrase, “the grid’s a diamond…. stupid!” lies a powerful message that calls for a re-evaluation of the grid infrastructure’s potential and the transformative impact it can have on our energy landscape. We need to remind ourselves that globally the total number of people without access to electricity and the grid is estimated to be around 760 million of which 600 million people live in Africa, or 43% of the total population, most of them (+- 98%) live in sub-Saharan Africa.
Call to action
The SA electricity utilities (includes Eskom and the municipalities) as owners of the national electricity grid have an opportunity like Amazon, Takealot and Uber to leverage and monetise the opportunities the grid presents through the various grid products and services that can be “sold” to their respective customers
The phrase “the grid’s a diamond…. stupid!” serves as a rallying cry for global stakeholders to prioritise grid infrastructure as a strategic asset in the energy transition journey. It underscores the urgency of investing in grid modernisation, fostering innovation in grid technologies, and building a reliable, resilient and interconnected grid network that can meet the evolving needs of the 21st-century energy landscape.
Path forward
As we stand at a crossroads in the South African electricity landscape, the electricity grid (currently “severely constipated”) presents an opportunity to transform challenges into opportunities. The appreciation and recognition of the grid’s diamond status does augur well…… it can lay the foundation for a more sustainable and prosperous energy future.
It is imperative that inter alia policymakers, industry role players, stakeholders, and communities come together to support initiatives that strengthen and modernise the grid infrastructure, ensuring that it shines brightly as the diamond of our energy system.
[The author, Vally Padayachee, CEng; CD(SA); FIMechE; FSAIMechE; MBA; MSc(Eng); Pr CPM; Pr Cert Eng; EDP (Wits}, is currently an AMEU Strategic Adviser, Executive Officer of PIESA, Chairman of the NRS Association Management Committee, an IAB Member of the University of Johannesburg as well as a former Senior Executive at City Power, Johannesburg , a former Executive Manager at Eskom Generation and former Executive Director and Board Member of Altron Power (The Powertech Group). This article is written in his personal capacity.
This article is an extract. For the full version, please contact Vally Padayachee on vally@vpassociates.co.za
